Real estate is transferred into the name of a revocable living trust through the use of a deed. The specific form, content, accompanying documents and recording requirements for deeds vary by state. Consult an attorney for assistance. Where there is a loan against the property, particular attention must be paid to any loan restrictions regarding a transfer of the property. Most loans contain a "due-on-sale" clause, which allows the financial institution to "accelerate" the loan (i.e., require immediate payment of the entire remaining balance) if the property is transferred. The acceleration clause in the loan is designed to help protect the financial institution when the property is transferred (usually by sale) to a third party whose creditworthiness has not been approved by the financial institution. Where the personal residence of a borrower is transferred to the borrower's own revocable Living Trust, however, there is no meaningful change in the ownership or use of the property. For this reason, federal law prevents lenders from invoking the "due-on-sale" clause in those instances, provided that the owner continues to occupy the home as the beneficiary of the Trust. Still, it is good practice to inform the lender of, and obtain the lender's consent to, the transfer. On the other hand, there is no such law prohibiting the lender from accelerating the loan where the property being transferred is investment property. In these instances, it is critically important that the Grantor of the Trust (the owner of the property) obtain the advance written consent of the lender, confirming that the "due-on-sale" clause will not be invoked. |